First Glance – Buyer’s Market for Park Models

Tim Howard, founder and president of Breckenridge, the nation’s largest builder of park models, said that when the cost of materials went up recently, his company chose to absorb the increase rather than pass the cost along as it usually would. He noted that not just manufacturers, but retailers too are responding to market conditions, by “making prices very attractive.”

{mosgoogle left}Secondly, there is increasing competition among manufacturers. Palm Harbor Homes and Silvercrest, two companies known for their manufactured homes, are now designing park models especially for the Pacific Northwest, giving consumers more choices.

Bob Wright, regional vice president of Palm Harbor Homes, said, “Builders are broadening their product offering to reach more consumers at competitive prices. We are all familiar with the phrases ‘buyer’s market’ and ‘seller’s market.’ Well, this truly is a buyer’s market.”

One problem that the industry has always faced is that many people are unfamiliar with park models, which are classified as RVs, but most often function as vacation cabins. They are built in factories, so there are cost-savings that make them cheaper than a cabin or cottage built on-site. They can be up to 400 square feet, are mounted on wheels and are usually sited in an RV park or campground on a long-term basis, though they can also be put on a private lot, depending on state and local regulations.

Bill Garpow, executive director of the Recreational Park Trailer Industry Association, said sales of park models have dropped nearly in half since their peak in 2005. He said the market is being hurt by uncertain economic conditions and the credit crunch. Loans have dried up, and even though most park models are bought for cash, some of that cash probably comes from drawing on home equity financing or taking profits on investments, and those sources may no longer be available with the decline in housing prices and the stock market.

Still, despite these conditions, Nor’Wester Industries, a longtime park model builder in the Pacific Northwest, says its orders have remained surprisingly strong.

Perhaps one reason Nor’Wester is prospering is that it sells most of its park models through RV resorts, either to resort owners for rental units or to individuals to place in a resort. Bob McNeely, one of the company’s owners, said sales this past January were the best for that month in the company’s history.

While credit has gotten tighter, McNeely said his company has 20-year financing available through banks and credit unions.

Some people are buying park models not only for their personal use, but also as an investment, McNeely said. Nor’Wester has a program that enables individuals to put their park model into a pool for rental when they are not using it themselves.

In addition, McNeely said, park models can grow in value, depending on the location where they are placed and the quality of construction. He said the first unit Nor’Wester sold 20 years ago for $40,000 is now at a resort where its current value is probably five times the original cost.

Wright, the Palm Harbor regional vice president, said retirees, young families and RV parks are among the many customers for park models.

“Retirees who enjoy traveling north during the summer and south during the winter frequently seek a semi-permanent base without the burden or expense of maintaining a large home,” he said. “They are able to purchase a park model and place it on a small lot, frequently adjacent to an RV site, and use it during the quality weather months.”

He added: “New demand has also been created by recreational enthusiasts that want the ability to travel a short distance from their primary residence to enjoy the outdoors for the weekend and holidays. They are finding they can purchase a park model and place it near a lake, at the coast, or in a destination resort in the mountains and be able to use it as their getaway throughout the year without the cost and time of having to travel hundreds of miles.”

You can see some of the newest park models on Page 24 this month. On Page 27, you can see how some park model owners are expanding their living space with covered porches, outdoor kitchens and other additions.